The myths of Obamacare’s ‘failure’

Attacks on the Affordable Care Act have stepped up over the last week or so. You’d think that the healthcare reform known as Obamacare is leading to the wholesale loss of affordable insurance by huge sectors of the American public, many of whom will be impoverished by being forced into low-quality health plans at exorbitant prices.

You’d think the entire reform is on “life support,” as the usually judicious National Journal put it today, speculating that Democrats may soon start calling for its repeal.

Don’t buy the hype. The numbers tell an entirely different story. What they also demonstrate is that the myth of Obamacare’s “failure” is a product of the same Republican noise machine that has been working to undermine this crucial reform since Day One. It’s assisted by news reporting about canceled health policies that typically ranges from woefully misinformed to spectacularly ignorant, and even at its best is incomplete.

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Indeed, the spectacle of Democrats panicking over bad news on Obamacare resembles the herds of giraffes one sees on the Serengeti being stampeded by swarms of tsetse flies. Here’s a lesson the giraffes could teach the Dems: Stampeding leads only to injuries and death, and doesn’t solve the tsetse fly problem.

It’s true that there are several ways that Obamacare can be improved. We’ll explain some of them in an upcoming post.

In the meantime, let’s take a look at what’s actually happening on the ground. What’s essential here is to examine how many people are being thrown off their existing health plans by Obamacare and forced into costlier plans with lesser benefits -- the category of Obamacare “victim” garnering most of the hand-wringing attention. It’s also important to measure that figure against the number of people who will unquestionably be helped by Obamacare.

You’re about to learn that the number of victims is much smaller than you’re being led to think and is swamped by the ranks of beneficiaries.

One problem contributing to the confusion is that the actual number of people in the individual insurance market -- the real target of the Affordable Care Act -- is frustratingly murky. My research has turned up several dozen studies, news reports and academic papers analyzing the market segment without settling on a single figure. (I’ve read them so you won’t have to, but if you must, I’ve compiled a clickable list of 15 of them here.)

We can, however, decently estimate that the market for individual policies is about 30 million people. Of those, more than 20 million are uninsured. For virtually all of them, Obamacare is an unalloyed blessing. The Congressional Budget Office estimates that about 81% of all individual policy-holders will be eligible for income-based insurance subsidies. The uninsured population skews poorer than the total individual market, so an even higher proportion of them are likely to be subsidized. The Affordable Care Act also forbids insurers to base the cost and availability of insurance on pre-existing conditions, which has kept millions of people out of the individual market.

What about individual policy-holders? They number somewhere between 8.5 million and 9.5 million. The vast majority of these customers -- two-thirds -- spend less than a year in the individual market, according to a 2004 study published in Health Affairs. The study found that most people use individual insurance to bridge between periods of coverage from employers or public programs like Medicaid. If three-quarters of the individual customers will be eligible for insurance subsidies, that leaves 2.1 million to 2.4 million Americans paying the full freight.

The last piece of the puzzle, and the murkiest, is how many of this last group will be paying higher prices for lesser coverage -- the emblematic Obamacare “victims.” Even if it’s all of them, at most they account for less than 1% of the country.

But plainly they’re not all paying more for less. We know this because the individual market is where people have been getting ripped off by overpaying for inadequate coverage -- “junk” insurance in many cases. It’s where premiums are driven up and coverage constrained by pre-existing conditions. Those practices are eradicated by the Affordable Care Act.

Kevin Drum of Mother Jones posits that one-third of these customers may be charged more for less, which sounds reasonable, if perhaps a little high. I’ve heard from dozens of readers who claim to be in that group. But my experience, which I’d guess is matched by most of my journalistic colleagues, is that most of them aren’t examining their options very well. They’re not calculating their costs beyond their premiums -- the free services mandated by Obamacare they’re not getting today, for instance. They’re not factoring in the rate increases on their existing plans they’ve been hit with in the past, and would face again, but will be limited under Obamacare.

That doesn’t mean that Obamacare victims don’t exist. Charles Ornstein of ProPublica found a couple in California who are losing a good Kaiser plan and face a doubled premium for no gain in benefits. But their story is also incomplete. They’ve been getting good rates because they’ve been in good health -- in fact, the entire customer base in their plan have turned out to be good risks, allowing Kaiser to gift them with good rates. But the transition from good health to bad can take place in the blink of an eye; in that case, if they lost their Kaiser coverage, then without Obamacare they’d be left at the mercy of high premiums and coverage exclusions resulting from their pre-existing conditions.

The bottom line is that we’re down to about one-quarter of one-percent of the country being paraded around to set the agenda for everyone else -- fewer than 2 million people. Compare that with the number of people who are being denied health insurance in 21 states that have refused to expand Medicaid, as the Affordable Care Act allows them to do largely at federal expense. (Four other states are still thinking it over.)

This group numbers about 5 million, and in every case they’re being deprived of health coverage by Republican governors or legislatures, or both. That should tell you that the Republicans who are carrying on about Obamacare’s “failure” really don’t have your welfare in mind, any more than the characters hawking diet plans on late-night TV really want you to get thin.

Of the 261 House members who voted last week in favor of a bill allowing insurers to keep offering customers canceled health plans, 141 represent states that haven’t expanded Medicaid to the maximum. They include 11 Democrats. If they really cared about their citizens, they would urge their state governments to get off their duffs and approve the Medicaid expansion. But they don’t really care.

The fact is that Obamacare is here to stay. Its customer protections are worth real money to tens of millions of consumers, and it’s vastly expanding the insurance market. The politicians claiming that they’re only out to “fix” a broken program are playing you for suckers, and not for the first time.

Hurt or helped by Obamacare? Tell me your story.